Peterson v. Lottery.com

Court of Appeals for the Fifth Circuit·Decided November 5, 2025·No. 25-50261·Unpublished

Opinion

United States Court of Appeals for the Fifth Circuit

____________ United States Court of Appeals Fifth Circuit

No. 25-50261 FILED ____________ November 5, 2025 Lyle W. Cayce

Ryan Peterson, Clerk

Plaintiff—Appellant,

versus

Lottery.com, Incorporated, doing business as Sports.com, doing business as Autolotto, Incorporated,

Defendant—Appellee.

Appeal from the United States District Court for the Western District of Texas USDC No. 1:23-CV-646

Before Smith, Stewart, and Ramirez, Circuit Judges. Per Curiam: * Ryan Peterson sued his employer, Lottery.com, under the Fair Labor Standards Act (FLSA) and state law, after it allegedly failed to pay his salary and reimburse his expenses for over two years. He appeals the district court’s dismissal of all his claims. We AFFIRM in part, REVERSE in part, and REMAND for further proceedings.

*

This opinion is not designated for publication. See 5th Cir. R. 47.5.

No. 25-50261

I

A

On March 30, 2020, Peterson “accepted the position of Vice President of Research & Development” at Lottery.com, in which he would oversee internal IT operations and design software solutions supporting Lottery.com’s daily activities in the United States. He was also tasked with recruiting personnel for various roles, building compliance and operations teams, and leading the development of Lottery.com’s core business products. In a “written employment contract,” Lottery.com agreed to pay him an annual salary of $200,000, payable on a biweekly basis. After Peterson was promoted to “Executive Vice President, Technology,” in February 14, 2022, his annual salary was increased to $350,000. From the beginning of his employment until July 8, 2022, Peterson received his agreed bi-weekly salary.

On July 29, 2022, Lottery.com furloughed most of its employees because it “did not have sufficient financial resources to fund its operations or pay certain existing obligations, including its payroll and related obligations.” Peterson alleges that he was not furloughed, continues to be employed by and complete work for Lottery.com, and has not been paid any compensation since July 8, 2022, his “last date of full payroll.” He also claims he is owed reimbursements for company expenses he personally paid to keep the company operating. For example, he has been paying the fees for registering and annually renewing Lottery.com’s primary domains, along with 16 other company domains, since August 8, 2022. He also alleges that Lottery.com continues to use these domains for various business purposes but has failed to reimburse him for his personal expenditures to keep them active. On multiple occasions since the furlough, Lottery.com’s representatives allegedly represented to Peterson that he would receive his agreed compensation and reimbursement for company expenses to induce

No. 25-50261

him to continue performing his duties for Lottery.com. He relied on these misrepresentations to his detriment and continued to perform services with the expectation of being compensated under the agreed payment structure.

B

Peterson sued Lottery.com, asserting a minimum wage violation claim under the FLSA, as well as state law claims of breach of contract, fraud and fraudulent inducement, quantum meruit, and unjust enrichment. He also sought a declaratory judgment finding that “he is the sole owner, or at minimum he is an equal co-owner of all right, title and interest in and to the Domain Names <Lottery.com.> and <sports.com> and goodwill appurtenant thereto.”

Lottery.com moved to dismiss all claims under Rule 12(b)(6). A magistrate judge recommended dismissal of the FLSA claim because Peterson had not stated a claim for unpaid minimum wages and because he was exempted from the minimum wage requirements. The magistrate judge also recommended dismissal of his state law claims for failure to state a claim. Over Peterson’s objections, the district court adopted the magistrate judge’s recommendations and dismissed all claims against Lottery.com.

On appeal, Peterson challenges the district court’s dismissal of his FLSA claims and his state law breach of contract, fraud and fraudulent inducement, quantum meruit, and unjust enrichment claims. 1

1 Although Peterson’s brief also addresses the dismissal of his request for declaratory judgment, he forfeited the issue by not listing it in the statement of issues in violation of Rule 28(a)(5). See United States v. Quintanilla, 114 F.4th 453, 464 (5th Cir. 2024) (“Where a party fails to list an issue presented in his or her statement of the issues, the issue is forfeited even if he or she raises the issue in the body of the brief.”).

No. 25-50261

II

We review the district court’s grant of a motion to dismiss under Rule 12(b)(6) de novo, “accepting all well-pleaded facts as true and viewing those facts in the light most favorable to the plaintiffs.” Molina-Aranda v. Black Magic Enters., L.L.C., 983 F.3d 779, 783 (5th Cir. 2020). “But we do not accept as true conclusory allegations, unwarranted factual inferences, or legal conclusions.” Heinze v. Tesco Corp., 971 F.3d 475, 479 (5th Cir. 2020) (citation modified). “To survive a Rule 12(b)(6) motion to dismiss, the complaint ‘does not need detailed factual allegations,’ but it must provide the plaintiff’s grounds for entitlement to relief—including factual allegations that, when assumed to be true, ‘raise a right to relief above the speculative level.’” N. Cypress Med. Ctr. Operating Co. v. Cigna Healthcare, 781 F.3d 182, 191 (5th Cir. 2015) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). “A complaint must therefore contain ‘enough facts to state a claim to relief that is plausible on its face.’” King v. Baylor Univ., 46 F.4th 344, 355 (5th Cir. 2022) (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

“State law fraud claims are subject to the heightened pleading requirements of Rule 9(b).” Sullivan v. Leor Energy, LLC, 600 F.3d 542, 550– 51 (5th Cir. 2010) (citing Dorsey v. Portfolio Equities, Inc., 540 F.3d 333, 339 (5th Cir. 2008)). To meet that heightened pleading standard, plaintiffs “‘must state with particularity the circumstances constituting fraud,’ which, at a minimum, includes ‘the who, what, when, where, and how of the alleged fraud.’” Daughtry v. Silver Fern Chem., Inc., 138 F.4th 210, 215 (5th Cir. 2025) (quoting United States ex rel. Steury v. Cardinal Health, Inc., 735 F.3d 202, 204 (5th Cir. 2013)), petition for cert. filed, (U.S. Oct. 2, 2025) (No. 25- 392).

No. 25-50261

“Although the failure-to-state-a-claim inquiry typically focuses on whether the plaintiff plausibly alleges the element of a claim, a Rule 12(b)(6) dismissal may also be appropriately based on a successful affirmative defense provided that the affirmative defense appears on the face of the complaint.” Am. Precision Ammunition, L.L.C. v. City of Min. Wells, 90 F.4th 820, 824 (5th Cir. 2024) (citation modified). “In such a scenario, the pleadings must ‘reveal beyond doubt that the plaintiffs can prove no set of facts’ that would overcome the defense or otherwise entitle them to relief.” Jeanty v. Big Bubba’s Bail Bonds, 72 F.4th 116, 118–19 (5th Cir. 2023) (quoting Garrett v. Commonwealth Mortg. Corp., 938 F.2d 591, 594 (5th Cir. 1991)).

III

Peterson argues that the district court erred in dismissing his FLSA claim. 2

A

Peterson first challenges the district court’s finding that he failed to adequately allege an FLSA minimum wage violation.

Under the FLSA, employers are required to pay minimum wages to any covered employee. See 29 U.S.C. § 206(a)(1). To state a claim for violation of the FLSA, “an employee must plead that the employee is covered by the FLSA and that the employer failed to pay the FLSA-required

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